Why Contract Logistics is Important for Your Business

Why Contract Logistics is Important for Your Business Trade has undergone notable changes in recent years. When it comes to logistics, it mostly moved goods from one place to another in the past. But with the market demands changing rapidly with new orientations, contract logistics has become indispensable for businesses to monitor and manage operations.

What is Contract Logistics?

You can regard Contract Logistics as the end-to-end process from production to distribution at the final point of sale. Contract Logistics is not only a process of transporting goods from one place to another, but it involves a complicated process merging traditional logistics with supply chain management processes.

The complications also bring a 4PL (Fourth Party Logistics) into the picture. It is a process by which the main logistics operator, a 3PL (Third Party Logistics) provider, coordinates operations with a fourth stakeholder.

The 4PL takes charge of managing the entire supply chain and creates a value chain in which various stakeholders play a productive role.

Flexibility One of the great motivations for businesses is flexibility in operations. It also creates value. A contract logistics partner bears more ability to absorb fluctuations and volume increases than an in-house operator.

A contract logistics company can easily share facilities and labor. And that allows it the flexibility to move around resources and respond in ways the manufacturer wants. As such, a contract logistics company strongly appeals to FMCG companies with the robust launch and promotional cycles that can create fluctuations in regular flows.

Also, a contract logistics company helps eCommerce companies penetrate more into a market as a contract logistics partner provides a more agile way to establish a presence.

Business Practice Improvement When businesses work with an in-house logistics partner, much operational inefficiency arises that negatively affect logistics costs. And often, the drivers of costs are beyond the control of the logistics manager.

The order profile strongly influences the logistics costs. Factors like order frequency and order value come into the picture while determining the logistics costs.

It will help if businesses work with a contract logistics partner to optimize the operations and lower inefficiencies. With efficient logistics operations, the costs will also go down.

Contract logistics providers provide a service that brings efficiencies in all aspects of your business.

Eases Management If you prefer keeping all 3PL logistics company services in-house, you need to manage many departments and functions. However, if you work with a contract logistics partner, then things become easier to manage.

Scalable Scalability is an important feature of a contract logistics company. And this aspect comes in handy if you are an eCommerce company. When your business grows, you need to find space, storage, and transportation quickly. And during downtimes, you need to store the unused capacity. You can easily manage the expansion and contraction by working with a contract logistics company, effectively managing the changing requirements.

Always Up-to-Date As logistics are the business of third-party service providers, they keep themselves up-to-date with the latest trends to not lose their brand. They keep themselves up-to-date on innovations, technology, and new procedures. They usually have the resources to invest in keeping themselves modern to improve your efficiency and enable you to improve your bottom line.

The Indian Scene Contract logistics in India is gaining popularity day-by-day with an increasing number of businesses switching over to it. Simultaneously, there are many 3pl solution providers in India, such as Varuna, that improve your business efficiency.